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Fixing an exchange rate can be beneficial
Fixing an exchange rate can be beneficial
| Published: | 5 Mar at 6 PM |
Getting the right exchange rate when moving overseas can make a huge difference, reports the Daily Telegraph.
City whizz-kids have earned and lost fortunes on gambling on how the foreign exchange markets move. However, for expatriates the exchange rates movements are not about making cash by speculating on rises and falls; it’s much more important than that. If the exchange rate is plunging, it can be the difference between possessing enough to purchase a home in a foreign country or not.
There are few expats who will tie all their finances up in one country. Furthermore, many will have intentions to move back to their home country or somewhere else in the future. Due to this, they are unlikely to risk large shifts in exchange rates which could damage their plans.
A popular option now is to fix exchange rates with a forward contract. This enables you to exchange your funds at a rate which you’re happy with for a delivery on a future date of your choice. These contracts are used mainly by people wanting to transfer large sums of cash for big purchases like buying property or moving their finances to a new country.
Currency brokers HiFX’s Marc Bodega said that forward-priced contracts now make up between five and 10 per cent of its business. He explained that most are looking for protection against the risk of exchange rates moving too much. He added that these clients hope for peace of mind and make up 90 per cent of all forward contract buyers.
City whizz-kids have earned and lost fortunes on gambling on how the foreign exchange markets move. However, for expatriates the exchange rates movements are not about making cash by speculating on rises and falls; it’s much more important than that. If the exchange rate is plunging, it can be the difference between possessing enough to purchase a home in a foreign country or not.
There are few expats who will tie all their finances up in one country. Furthermore, many will have intentions to move back to their home country or somewhere else in the future. Due to this, they are unlikely to risk large shifts in exchange rates which could damage their plans.
A popular option now is to fix exchange rates with a forward contract. This enables you to exchange your funds at a rate which you’re happy with for a delivery on a future date of your choice. These contracts are used mainly by people wanting to transfer large sums of cash for big purchases like buying property or moving their finances to a new country.
Currency brokers HiFX’s Marc Bodega said that forward-priced contracts now make up between five and 10 per cent of its business. He explained that most are looking for protection against the risk of exchange rates moving too much. He added that these clients hope for peace of mind and make up 90 per cent of all forward contract buyers.
